Notes from some analysts after the Q124 results:
Piper Sandler cuts Avita Medical stock target by $12
On Tuesday, Piper Sandler adjusted its stance on Avita Medical Ltd . (NASDAQ:RCEL), downgrading the stock from Overweight to Neutral and significantly reducing the price target to $9.00 from the previous $21.00.
The firm cited several concerns following the company's first-quarter earnings report for fiscal year 2024, which aligned with the figures provided in their April update. Avita Medical anticipates its full-year 2024 revenue to be at the lower end of the previously forecasted range between $78.5 million and $84.5 million, representing a growth of 57% to 69%.
For the second quarter of fiscal year 2024, Avita projects revenue to be between $14.3 million and $15.3 million, which is slightly below the target set by Piper Sandler. The analyst expressed skepticism about the company's ability to meet its full-year guidance, noting that they expect revenues to fall short of the management's lowest estimate.
The recent departure of Avita's Vice President of Sales was also highlighted as a potential issue, as it could disrupt the sales force's focus and productivity, thereby impacting the company's sales performance.
Additionally, the company has seen a significant increase in operating expenses (OPEX), raising the possibility of another equity raise to fund operations. Although Avita has a credit facility in place, the combination of these factors has led to an elevated risk profile for the stock.
The analyst concluded by acknowledging the merit of Avita's technology but indicated that the current challenges have prompted a more cautious view, leading to the adjustment in the price target.
Avita Medical shares target maintained on optimistic future
On Tuesday, BofA Securities maintained a Buy rating on Avita Medical Ltd . (NASDAQ:RCEL), with a steady price target of $21.00. The firm is optimistic about the company's future, anticipating an increase in momentum as the year unfolds, owing to several short-term catalysts.
These include the anticipated launch of RECELL GO on May 31, 2024, and the planned submission of RECELL GO Mini's premarket approval (PMA) in June 2024.
The analyst from BofA Securities highlighted that the forthcoming TONE & Health Economic studies, expected to be published by the end of 2024, will be instrumental in securing reimbursement for Vitiligo treatments in the 2025 calendar year. This development is seen as a key factor in Avita Medical's strategy to transform into a broader wound care business, which is projected to contribute to the company's long-term growth.
Despite maintaining revenue estimates for the fiscal years 2024 to 2026, BofA Securities revised its operating cost forecasts for the same period. The firm increased its operating cost projections by 10% for FY24, 15% for FY25, and 4% for FY26. This adjustment follows the company's financial results released today, which indicated changes in the anticipated expenses.
Avita Medical's focus remains on the RECELL System, a device that enables healthcare professionals to produce a suspension of Spray-On Skin Cells using a small sample of the patient's skin for treating acute thermal burns. With the new product launches and study results on the horizon, the company is poised to enhance its position in the market for skin treatment and wound care.
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